by MAURA KELLER
New technologies and innovative products can keep any industry fresh. And the innovation and subsequent influx of electric vehicles (EVs) into the country’s transportation market – albeit slow – is no exception.
Thousands of companies, including most automotive recyclers, are paying close attention to the new technology and how this growing market will affect their enterprise. While recyclers – both large and small – are continually enhancing and expanding their products, processes and automotive recycling know-how, they are also aware that the transition from internal combustion engines (ICE) to EVs may change the way they do business.
According to Anthony Schiavo of Lux Research, many automotive manufacturers are moving away from internal combustion engines and limiting or ending development. Groups like Volvo and Nissan have already confirmed plans to end or spin off ICE development.
“To the extent that ICEs continue to be deployed they will be used in trucks and some performance vehicles,” Schiavo said. “Development will still focus on efficiency, with partial electrification being the core development area. Partial electrification is already the most cost-effective way to improve vehicle efficiency, and it will only get cheaper as OEM’s battery supply chain improves.”
Allen Schaeffer, executive director, Diesel Technology Forum added that heavy-duty commercial truck makers are gearing up for another tightening of EPA emissions standards that will take effect starting in 2027. As Schaffer explained, this will impact Class 3-8 vehicles and will make them more expensive than current new model diesels. At the same time, California, Massachusetts, New York, New Jersey and Oregon have adopted California’s more stringent emission standards and a separate mandate in the Advanced Clean Truck Rule that requires manufacturers to sell an increasing percent of zero emission vehicles starting in 2024.
“Manufacturers are trying to balance continued investments in ICE with new zero emission vehicles (ZEV) products. There are some uncertainties about performance and acceptance, limited infrastructure for charging and some are still committed to diesel,” Schaeffer said.
So, what is the instigator for the changes regarding ICE vehicles and how will this impact the automotive recycling industry?
“Regulations still play a major role in driving EVs, but consumer preference is also very clear,” Schiavo said. “For example, the new F150 Lightning has a wait list of more than three years – indicating that current demand for EVs outstrips supply. On a design level, there’s also a clear consumer preference for larger cars. Partial electrification is a good way to deliver those larger sizes while keeping fuel efficiency reasonable.”
Schaeffer said practical reality is playing a key role in the adoption of EVs and its impact on automotive recycling. As he explained, today’s diesel and gasoline engines pay the bills and they will continue to do so for a long while until ZEV technology is embraced and the charging and fueling infrastructure is available to support it.
“I’d guess 2040 or later,” Schaeffer said.
Efforts to reduce greenhouse gas emissions and federal policies and corporate OEM commitments will also play a significant role in determining the relative speed and ultimate success of transition to EVs.
“With a major political shift in Washington we could see less emphasis on climate change and more investment in oil and natural gas. That would likely slow any major shift in vehicles due to diminished policies that encourage incentives or mandates,” Schaeffer said.
As far as passenger vehicles go, Schaeffer believes battery electric vehicles will be the future for passenger vehicles as they do offer performance advantages and economic savings.
“They have only about 20 moving parts compared to over 2,000 in today’s gas or diesel vehicle so the demand and supply of used parts in the future could change dramatically,” Schaeffer said. “With no engines or transmissions, that is a huge change from today.”
Impact on Recycling
Experts agree that the near term impacts from the switch from ICE vehicles to EVs will be modest. Schiavo expects it will take at least a decade for substantial numbers of EVs to come off the road.
“Nonetheless, we are already seeing many OEMs become active in vehicle end of life as it relates to electrification,” Schiavo said. “As EVs continue to scale, tailpipe emissions will be less of a concern and total vehicle lifecycle impact (in terms of emissions, waste, and resource usage) will be more important.” Schiavo suggested that OEMs may need to get more active in recycling to ensure the lower value materials in the car are handled responsibly.
“Additionally, a robust recycling program can help ensure a supply of raw materials for batteries which is the top concern of automakers today,” Schiavo said.
Schaeffer also stressed that there won’t be an influx of ICE vehicles to recycle. He said that would only happen if the government were to ban the use of ICE, and that would be difficult. “A legislator in California has previously introduced legislation to ban new ICE registration in California in 2030, but it went nowhere,” Schaeffer said. “Some manufacturers have pledged to end production of new light-duty ICE by 2035. There are about 15 million commercial trucks out there today and 3/4 are diesel. I expect recycling to remain pretty constant as it is today. If major shifts occur, it won’t be until 2040 or later.”
Part picking business models are also going to be more challenging; Schiavo pointed out that EVs are likely to have fewer moving parts overall and a higher proportion of electronics which will be difficult to interchange.
“Existing automotive recyclers will need to form partnerships with OEMs and cell manufacturers to ensure they benefit from the EV transition,” Schiavo said.
In addition, working on EVs requires special training about de-energizing the battery and charging systems. That’s why Schaeffer believes the biggest issue facing automotive recyclers will be EV battery recycling itself.
“That has tremendous opportunity well beyond current 12V lead acid batteries exchange and recycling programs,” said Schaeffer. “The lithium-ion batteries will be of high value. Also, EVs are heavier vehicles generally more than a comparable ICE, so that might be an issue for some recyclers.”
In addition, lithium ion (Li-ion) battery recycling will become a key battleground area as the batteries represent a large portion of the value of an EV. However, Schiavo pointed out that there’s a large number of new groups – both start-ups and larger corporations – looking to capture the emerging battery recycling market.
So, what advice do industry experts have for automotive recyclers evaluating the future of the industry in light of the transition from ICEs to EVs?
“Plan to quickly ramp up to accept and manage influx of EVs that are inevitably coming,” Schaeffer said. “Those that are early adopters of this capability will excel.”
Schiavo added that existing auto recyclers will need to move quickly to secure the technology they need to effectively recycle batteries. “However, auto recyclers do have the advantage of better access to end-of-life vehicles, which will help them stay relevant in the near terms.”
It’s also likely that there will be an oversupply of ICE end-of-life vehicles relative to the demand for parts – especially for sedans. “More and more ICE vehicles will be coming off the road, and there will be a smaller and smaller pool of operating cars that need parts,” Schiavo said.
As EV adoption spreads, the automotive industry’s focus will shift from tailpipe emissions to whole vehicle impact (in terms of manufacturing emissions and end of life). Schiavo said auto recyclers can proactively position themselves as key partners to auto OEMs by helping them both manage that end of life and by supplying lower impact raw materials.
“The business models and technologies used by auto recyclers are going to change a lot over the next two decades,” Schiavo said. “But the importance of auto recycling will only increase.”
Published in the September 2022 Edition